Indonesia: The Downside of Decentralization

As a new ICG report documents, devolution can heighten corruption. Overall, it was a net gain for Indonesia.

By Joshua Kurlantzick for The Diplomat

September 05, 2012

Over the past decade and a half, Indonesia’s democratic transition has been praised (including by me) as one of the most impressive of any developing country in the world. The distance traveled from the chaos, and potential split-up of the country, in the late 1990s, to the relative stability and high growth of today, is truly impressive. One of the main aspects of the democratization often highlighted by both Indonesia experts and many Indonesians themselves is how the country utilized political and economic devolution to reduce the power of Jakarta, cut the legacy of Suharto’s rule, increase local participation in politics and the economy, and improve citizens’ feeling of belonging to the polity. In such a diverse and geographically large country, an archipelago, such devolution might have seemed natural, but it was hardly natural to many Jakarta politicians during the early part of the transition period, men and women who had grown up in the Suharto-era and had become used to a centralized developmental state, and often had copied, even unwittingly, this centralization in their own opposition organizations.

Decentralization clearly has had many benefits. It has helped broaden and spread growth, and in some ways has helped pit local officials against each other in the race for investment, forcing them to take measures to help attract investment in infrastructure, resources, and agriculture. It clearly has helped boost participation in the political process, and has led to a broadening of political ideas in which politicians no longer have to come from Jakarta or even Java to get national prominence and to rise up the political ladder. Devolution also has, in some ways, helped mitigate local anger over natural resources being taken out of their area and used to fund the central government, with local people getting little in return.

Yet as the International Crisis Group documents in a fascinating new report, in empowering local officials, devolution sometimes empowers the most regressive, corrupt, and undemocratic local politicians, who use their local influence to stymie national-level courts, regulations, and politicians who often are devoted to more constitutional, liberal applications of the law. ICG’s findings are consistent with other studies, including the conclusions found in my upcoming book The Decline of Democracy, as well as those of economist Michael Rock and others. Rock has shown how, as Indonesia’s politics have opened up, there has actually been a decentralization of corruption, and in some ways an increase, as more actors are able to engage in graft.

What is the overall conclusion? Everyone is allowed to elect dumb, misguided, or even venal local politicians — we certainly do so sometimes in the United States. Is the devolution process in Indonesia still, on balance, a net positive? ICG does not really offer a conclusion on this, but I think so, despite the backsliding in some localities.

Joshua Kurlantzick is a fellow for Southeast Asia at the Council on Foreign Relations. He blogs at Asia Unbound, where this piece originally appeared. You can follow him on Twitter: @JoshKurlantzick.